Which statement best describes cash budgets?
A) They treat income and expenses the same as they are treated on an income statement.
B) They treat income and expenses differently than they are treated on an income statement.
C) They are relatively unimportant in the life of a small business.
D) They are tools for managing revenue.

Question

Quizplus · Accepted Answer

Cash budgets treat income and expenses differently than they are treated on an income statement. While income statements focus on revenue and expenses over a period of time, cash budgets focus on the inflow and outflow of cash over a specific period of time. Cash budgets are important tools for managing cash flow and ensuring a business has enough cash on hand to cover expenses.

Which Statement Best Describes Cash Budgets